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Governor rebuffed on counter proposal for natural gas tax

In one last attempt to pass a natural gas extraction tax before the end of session, Governor Rendell asked Senate Republicans for a counter proposal on the tax rate. Rather than offer another rate, the Republicans stuck by their 1.5 percent in the first year, with increases to five percent over five years. The Governor wants the rate to start at three percent and climb to five percent over three years.

In a letter to the Governor, Senate Republicans said they “do not believe it [a counter proposal] is a realistic way to reach accord.” The Governor said he was “extremely disappointed” with the failure to reach a compromise on the tax. The 2009-10 legislative session ends on November 30, and the Senate has no voting days scheduled.

Other obstacles remain as well. No agreements exists on language to legislation supported by the natural gas industry that it’s pushing as a package deal with the tax. One legislative proposal permits pooling of land in a drilling zone where owners without lease agreements with drillers would be paid the market rate for gas extracted from under their lands. Another bill would restrict local government use of zoning ordinances to block drilling operations.